CP149: Migration of Centrifuge Governance Token (CFG) to EVM

Centrifuge Governance Proposals
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1 
cp                : 149
title             : Migration of Centrifuge Governance Token (CFG) to EVM
authors           : @martin @0xgraham
contributors      : @jeroen
uses-component    : CP4
technical-proposal: no
requires-onchain  : no
impacts/modifies  : CP6
status            : rfc
date-proposed.    : [2025-03-06]

Short Summary

This proposal seeks governance approval for migrating the Centrifuge governance token (CFG) to an EVM-compatible token standard. It builds upon CP 141, which introduced Centrifuge V3, a multi-chain, EVM-based protocol.

To align governance with Centrifuge V3, this proposal mandates k/factory to launch a new EVM CFG token and initiate the structured migration of existing CFG and WCFG tokens.

The current Centrifuge Chain CFG token will be deprecated along with WCFG and replaced by a new EVM-based CFG token, minimizing disruption for token holders through a transparent migration plan.

High-level objective

The transition to an EVM-based CFG token is designed to:

Improve Governance: Enable direct onchain governance via established EVM tools such as Snapshot, Tally, and others.

Enhance Composability: Broaden exchange and DeFi integration for improved market efficiency.

Streamline Liquidity: Consolidate liquidity under a single, native EVM-based CFG token.

The goal will be to achieve these benefits while ensuring a seamless migration process that minimizes costs and maximizes value for existing token holders.

Background: Alignment with CP 141 & Centrifuge V3

Centrifuge has pioneered Real-World Asset tokenization, leading the institutional adoption of onchain markets. The proposal of Centrifuge V3 (CP 141) represents an important step towards a multi-chain, EVM-based protocol, offering enhanced liquidity, interoperability and institutional adoption.

Currently, the governance token, CFG, is split across:

  • CFG on Centrifuge Chain (legacy token)
  • Wrapped CFG (WCFG) on Ethereum

With the deprecation of the Centrifuge Chain, migrating CFG to an EVM-compatible token is necessary to ensure governance continuity and liquidity consolidation within the EVM ecosystem.

Migrating WCFG to CFG will reduce confusion on token structure, deepen liquidity and enable the ability to add native governance rules to the new CFG token.

Description of Activity

This proposal outlines the development and deployment of a new EVM-based CFG token and a transparent migration process for existing CFG holders. The key aspects include:

Token Specification and Tokenomics

  • Token Swap Ratio: 1:1
  • Current Total Supply: 560,246,258 CFG
    • CFG Supply on Centrifuge Chain: 414,100,347 CFG
    • Wrapped CFG Supply: 146,145,911 wCFG
  • Proposed Total Supply: 675,000,000 CFG

The proposed 115M CFG will be minted to the Centrifuge Network Foundation and used for the following:

  • Support the migration of the CFG token with exchanges and market makers
  • Incentives for targeted and relevant DeFi users to participate in value aligned activities
  • Strategic initiatives that support the growth of the protocol and product stickiness

The newly minted tokens will be gradually released over an extended period, guided by a structured distribution schedule designed to promote sustainable growth, align stakeholder incentives, and drive long-term value for the Centrifuge protocol.

The current 3% yearly inflation will remain in place and accrue to the Centrifuge DAO treasury.

Migration Plan and Process

Migration Start Date: [TBD]

Token Swap Ratio: 1:1

All CFG and WCFG token holders will be able to migrate their tokens by following the instructions on the Centrifuge App (https://app.centrifuge.io).

Legacy CFG

  1. Users will provide an EVM-based address.
  2. Users will submit a transaction on the Centrifuge Chain to request migration.
  3. Upon completion, users receive new CFG in their EVM wallet.
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WFCG (Wrapped CFG on Ethereum)

  1. Users will submit a transaction on Ethereum to swap WCFG for CFG.
  2. The process will follow standard token swap mechanisms, ensuring minimal friction.
    598×625 47.3 KB

Additional Migration Details

  • Migration Window:
    • Open: TBA. If the following proposal is successful, a post will be made on this post informing the community when the migration window opens.
    • Close: Nov 30th, 2025 to ensure all users can transition.
  • Unclaimed Tokens: After the migration window closes, all unclaimed legacy CFG will be migrated to the CFG treasury.
  • Centrifuge Treasury: The Centrifuge DAO Treasury (with all assets) will be migrated from the legacy chain to an EVM chain.
  • Please note, if you have any legacy CFG locked in onchain governance on Centrifuge Chain, you will need to unlock them first before migrating. If you have used conviction voting, this could take up to 36 weeks, depending on the conviction multiplier.

Governance & Future Enhancements

Phase 1: Governance via Snapshot

  • Initial governance voting will be conducted offchain via Snapshot to ensure a smooth transition.

Phase 2: Onchain Governance Framework

  • A subsequent proposal will introduce an onchain governance mechanism leveraging smart contract voting.
  • The governance structure will maintain flexibility for upgrades.
  • Key parameters such as quorum, voting power distribution, and governance execution mechanisms will be determined in a follow-up governance proposal.

Alignment to the mission of Centrifuge DAO

With the deprecation of Centrifuge Chain, migrating CFG to an EVM-based token is a necessary step to ensure the continued evolution of governance, liquidity, and protocol operations. This transition aligns with Centrifuge’s mission by maintaining accessibility, enhancing efficiency, and securing the long-term sustainability of RWAs onchain.

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The RFC will be open for a minimum of 7 days.

Looking forward to any feedback and any concerns you might have with this proposal.

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Next steps

If there is support for this proposal, the next steps will be to submit it to the Proposal Repository on GitHub and create an Opensquare snapshot vote.

4 Likes
2

Thank you @martin for the detailed and clear proposal.

We just created an RFC for AIR holders to be given the option of swapping their AIR for CFG post-migration. It’s possible that it could be included in your proposal as a modification…??

Please take a look and let us know what you think.

1 Like
3

I think this is more a question for governance. @ImdioR and @Rhano can you comment please?

My personal view is, that is would be an independent proposal that impacts/modifies this proposal. It would also require the minting of additional CFG.

Thanks for considering the AIR holders!

1 Like
4

$CFG token has already inflated gradually and you want to propose minting more CFG? Why can’t the DAO be used to buy back tokens instead then distribute it to “new” CEX, if there will be one. There’s no use case, utility, burning mechanism for this coin and yet proposed to mint more. Buy back is the best option.

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5

Hi @martin, this CP suggest to keep the current yearly inflation of 3% - coming from block rewards - but since a part of the the current block rewards are distributed to the collators (as defined in CP6), and there will be no collators in the new EVM setup, all the minted tokens will go the treasury.

Therefore, this CP modifies CP6.

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6

This proposal is still in RFC stage, so any modification driven by the Community or Token holders could be possible until the voting stage or could be a separate proposal also.

Personally, as a CFG and AIR token holder, I`m not sure that this is a good ration:

  • Token Swap Ratio: 1 AIR: 0.2 CFG

CFG price: 0.13218$\CFG
Air price: 0.00945$\ air.
0.132182 ÷ 0.00945 = 13.98 CFG\AIR

Even the ratio 1:14 will generate additional ~27M CFG to mint.
With a ratio of 1:28 that will be ~13.4M CFG to be mint. Which is not bad. imho.

7

Hi @Ant.lukz91
The Centrifuge Protocol should start generating protocol fees and become viable in order to buy back tokens.

Selling CFG → USD in order to buy back CFG from the market is nonsense. Imho.

Any thoughts, recommendations and ideas about the token utility that you might think of for CFG?

1 Like
8

I added CP6 as being impacted/modified.

1 Like
9

Our thinking wasn’t that more CFG be minted beyond the additional 115M CFG outlined in this CP, but rather the token swap would come from the additional 115M CFG minted.

5 AIR : 1 CFG might be too excessive of a swap rate, but it should be better than 14 AIR : 1 CFG. Using the calculations you presented @ImdioR, anything less and it would be a better move for AIR holders to simply sell their tokens and buy CFG on the open market as it would present a cost savings for them.

Perhaps something like 10 AIR : 1 CFG is more reasonable…??

10

I would ‘second’ a proper evaluation of CFG (including revisiting the tokenomics and rights/privileges of the token itself). I know some attempts have been made in the past, but remains clear that the current token model is not achieving its desired outcomes (if the price is any indication of the state of the ecosystem, we’ve witnessed an erosion of its value from $2 to $0.11 -a 95% correction).

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The historical approach of minting CFG to pay for services without solving the demand-side of the equation creates sell pressure and has been counterproductive to creating a robust ecosystem that incentivizes long-term ownership. CP149 will introduce further dilution without a measurable ROI from the newly-minted CFG (perhaps there is a plan for how these new tokens will be allocated, but it’s not clear from the proposal).

As a community we have an opportunity to rethink and reboot CFG token and have it play a bigger part of the DeFi ecosystem (perhaps with novel tokenomics). If we continue to take the same approach as before, we risk eroding more value.

@ImdioR Do you have a sense on how much protocol fees are being generated / available to implement a buyback? Or what other sources of revenue Centrifuge expects (perhaps @itsbhaji would know best)? It would be reasonable for Centrifuge to commit to using corporate revenue (or profits) from operations to buyback and retire CFG tokens. Binance (BNB) has had great success with this model.

Another idea (which would require some compliance effort) is to convert CFG to a security representing direct economics interests in the long-term success of Centrifuge (equity, bond, yield-bearing interest tied to pools on Centrifuge). Note that in the usual course of securities ownership, holders would need to be onboarded properly to claim these rights (KYC, AML, etc.) -note that Centrifuge has already built the infrastructure for this.

We could draw inspiration from other DeFi projects as well, but it would be helpful to understand from Centrifuge’s new leadership team so we can best think through solutions.

2 Likes
11

Good day @corl

The TAG posted a regular Treasury reports. You can find it here:

1 Like
12

It`s up to AIR token holders to decide whatever is more convenient for them.
But I can hardly imagine that everyone can get a good price when selling AIR and buying CFG.

13

Thanks. So the amounts are de minimis even at current TVL levels. @itsbhaji do you have any thoughts on how to increase protocol fees (without disincentivizing issuers) or monetization strategies beyond these fees?

14

Great question! We’ll be turning on the fee switch soon, ensuring that the protocol captures more value as TVL scales. The goal is to structure fees in a way that aligns incentives—balancing protocol revenue while keeping issuers engaged and competitive. Beyond protocol fees, we’re also exploring additional monetization strategies, including services and subscription based fees. Happy to hear ideas and discuss further!

2 Likes
15

@TheMarcus

Regarding the proposed AIR proposal, we request that this proposal be independent from CP149. If CP149 were to be successful, we invite you to continue with your proposal and allow the community to take a vote on being able to swap AIR for the newly minted CFG.

@corl

As a community we have an opportunity to rethink and reboot CFG token and have it play a bigger part of the DeFi ecosystem (perhaps with novel tokenomics). If we continue to take the same approach as before, we risk eroding more value.

We fully align with this requirement. Post CP149, an RFP will be published to the community for ways to improve CFG utility. We’re excited that alongside the new version of the Centrifuge Protocol that CFG utility will be improved.

2 Likes
16

Sounds good, @0xGraham. We’ll move forward with a proposal if/when CP149 passes.

1 Like
17

Could you provide some more context to the 115M CFG being minted, and some details around arriving at that number? Wouldn’t it be a good opportunity to mint more, if already minting, to make a bigger impact? :eyes: :folded_hands: